Val Breit remembers it clearly: the moment she realized what her $42,126 of student loans really meant.
She was sitting in her childhood bedroom, looking at a chart provided by her loan servicer. It showed that she’d be 45 years old by the time she paid back her loans — and that she’d pay nearly $32,000 in interest. Overwhelmed, she burst into tears.
“I just didn’t understand the reality of my financial situation until I saw it in black and white,” Val says. “I didn’t understand how much interest I was paying — and the huge amount I could save if I paid [off my loans] early.”
That moment lit a fire under her, a fire that made her determined to not pay more than she had to. Here’s how Val paid off her loans in 34 months — while earning a $36,000 salary.
Racking up $42,126 of student loans
While Val had worked hard to save up $4,000 for her first car, it never occurred to her to save for college.
“I just thought if your parents don’t pay, financial aid pays,” she says. “[The amount] was so big that I didn’t even try. … I thought that was just what everybody did.”
She went to a public university in her home state of Wisconsin, where she earned both a bachelor’s degree and a master’s degree — and racked up $42,126 of student loans.
Looking back, Val says she had no idea what she was getting herself into. She didn’t know that she’d be earning only $36,000 per year after six years of school — and that after taxes, insurance, and retirement, her salary wouldn’t seem like much.
But the biggest thing Val didn’t understand? Compound interest.
“I didn’t understand that borrowing $50,000 would actually cost $100,000 if you drag it out for 20 years,” she says. “I didn’t understand what compound interest meant until it was slapping me right in the face.”
How Val tackled her massive student loans
Smartly, Val consolidated her high-interest Federal Direct Loans — and omitted two loans she’d taken out when interest rates were lower.
Here’s what she ended up with:
- One Direct Loan of $33,970.30 consolidated at 6.75%
- Two non-consolidated Direct Loans equaling $2,625.80 at 1.79%
- One Perkins Loan of $5,530 at 5.00%
Her servicer had put her on a 20-year repayment plan with a minimum payment of $250 per month.
But after plugging her numbers into a prepayment calculator, she realized paying an extra $200 each month could eliminate her student loans in just eight years — and save her about $20,000 in interest.
That spurred her into action. “Those were my numbers — my amount,” she says. “It wasn’t generic, so it really hit home for me.”
Once she graduated, Val didn’t even take advantage of the six-month payment grace period.
“As soon as I started getting my real paycheck, that was extra money I’d never had before,” she says. “I started throwing that at my debt right away, before interest even started accruing.”
How Val put half her income toward her student loans
She set up an automatic payment for $450 every month and threw any extra money at her debt: $25 here, $100 there.
“Anytime my bank account was more than $1,000 and I knew my bills were covered, I put whatever I could [toward my loans],” she says.
She’d been responsible for her bills since starting college — groceries, gas, cellphone, etc. — so she was used to a frugal lifestyle.
And she didn’t let that change once she started working as a public school counselor, a job that paid $36,000 per year — “way more,” she says, than her $10-per-hour job in college.
She and her now-husband cooked all their meals at home, used hand-me-down furniture, and drove old cars. And because she didn’t want to pay for a new phone or data, Val didn’t have a smartphone.
“I didn’t even have texting for a while because of the extra money I could save each month,” she says. “Man, did my friends tease me for that.”
Thanks to her frugality, she was able to put approximately half her income toward her loans. In two years, she paid off about $32,000.
Then she got married and merged finances with her husband (and paid for a destination wedding debt-free). Together, they paid off the remaining $10,000 in the following year.
“I thought when I hit the final submit button that confetti was going to start shooting out of my computer,” she says. “There wasn’t even a congratulations message, so I wondered if it really worked.”
For proof, she took a screenshot of the zero balance and added big red arrows and the words “Boom!!! Outta here, Sallie Mae!!”
She’d just paid off her loans — not in 20 years or eight years but in just 34 months. And she’d saved more than $27,000 in interest.
Val’s advice for others with student loan debt
Would you like to pay off your loans early, saving tens of thousands of dollars in the process?
I thought so. Here are Val’s four best tips.
1. Do the math
Val never would’ve paid off her loans as aggressively if she hadn’t seen the numbers. That’s why it’s essential to calculate both the monthly payment and the amount you’ll pay over the lifetime of the loan, she says.
“Once I was aware,” she says, “I couldn’t unlearn how much money I was wasting in interest.”
To see your own numbers — and how much you could save by paying early — check out our student loan prepayment calculator.
2. Consider student loan refinancing
“One mistake I made was not refinancing,” says Val. “I had a pretty high interest rate, so that could’ve lowered my payments.”
If she qualified for student loan refinancing, there’s a chance her interest rate would’ve dropped significantly.
But if Val had been seeking Public Service Loan Forgiveness (PSLF) or a similar program, it wouldn’t have been wise to refinance. She would’ve lost the ability to take advantage of certain federal programs and protections.
Unfortunately, she wasn’t able to go this route because her school didn’t qualify for PSLF.
3. Realize you’re not a victim
An important mental shift, Val says, is realizing you’re not stuck, that you’re not a victim to the loan.
“It doesn’t have to be normal to have that debt,” she says. “You can make choices and trim your budget and get rid of it, even on a modest salary.”
4. Remember your ‘why’
Why do you want to pay off your loans early? Is it so you can have freedom to travel? So you can start a business?
For Val, it was so she could be debt-free before having kids. Coming back to that reason, she says, motivated her to keep going when things got tough and she wanted to give up her ambitious mission.
So before you embark on a debt repayment plan, she urges you to think about “what you could do with that money — what you could do with your life.”
With her “why” as a guiding light, Val is now a stay-at-home mom to two kids.
“It would never be the case if we had debt payments,” she says. “I never would’ve thought that paying off my loans would lead to this; it’s a dream come true. I’ve heard others say they wish they could stay home but can’t afford it — and I know they’re making more money than we do. It can be done. … I hope this story’s an inspiration for the average Jane or Joe.”
Thanks to Val for sharing her story with us! If you want more of her advice, check out her book Pay Your Student Loans Fast.
Interested in refinancing student loans?Here are the top 9 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.88% – 6.15%1||Undergrad & Graduate|
|1.88% – 5.64%2||Undergrad & Graduate|
|2.50% – 6.85%3||Undergrad & Graduate|
|1.89% – 5.90%4||Undergrad & Graduate|
|2.25% – 6.39%5||Undergrad & Graduate|
|1.88% – 5.64%6||Undergrad & Graduate|
|1.90% – 5.25%7||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|2.13% – 5.25%8||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of June 1, 2021.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Interest Rate Disclosure
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.59% APR to 5.79% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.88% APR to 5.64% APR (excludes 0.25% Auto Pay discount). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 36% (the maximum allowable for these loans). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 2.04% and 5.8% to the one month LIBOR. Earnest rate ranges are current as of 6/8/2021, and are subject to change based on market conditions.
Auto Pay Discount Disclosure
You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
Student Loan Refinancing Loan Cost Examples
These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit earnest.com/licenses for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.
One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.
© 2021 Earnest LLC. All rights reserved.
3 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.
4 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
5 Important Disclosures for SoFi.
Fixed rates from 2.74% APR to 6.74% APR (with autopay). Variable rates from 2.25% APR to 6.39% APR (with autopay). All variable rates are based on the 1-month LIBOR and may increase after consummation if LIBOR increases; see more at SoFi.com/legal/#1. If approved for a loan your rate will depend on a variety of factors such as your credit profile, your application and your selected loan terms. Your rate will be within the ranges of rates listed above. Lowest rates reserved for the most creditworthy borrowers. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license #6054612; NMLS #1121636 (www.nmlsconsumeraccess.org). Additional terms and conditions apply; see SoFi.com/eligibility for details. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
6 Important Disclosures for Navient.
7 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 04/07/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.
8 Important Disclosures for PenFed.
Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.13%-5.25% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.